How to Get Out of Debt With the Get Out of Debt Guy » real-estate

Talk Show Host And Financial Advisor Sentenced For Ponzi Scheme

Amanda Miller — Tue, 24 Jan 2012 17:00:43 +0000

Wednesday marked the announcement that Anthony Cutaia was sentenced to 51 months in prison for mail fraud “Ponzi” investment scheme.

Cutaia had pled guilty in July 2011 to Count 2 of a Criminal Information filed in June 2011, which charged him with mail fraud in connection with his participation in a real estate investment scheme from 2003 to 2006, in violation of Title 18, United States Code, Section, 1341.

According to the filed Information and statements made during the plea hearing, Cutaia was the managing member and beneficial owner of CMG Property Investment Group, LLC, which purportedly engaged in commercial real estate investment. Cutaia was also the host of “Talk About Mortgages and Real Estate,” a television and radio program.

According to the factual basis in the plea agreement, from March 2003 through December 2006, Cutaia entered into Contract Participation Agreements with investors. These contracts stated that investors’ money would be used solely to purchase real estate contracts in Palm Beach and Broward Counties and that CMG would not collect commissions or fees until the properties were sold and a profit was made. In fact, however, Cutaia allegedly invested little of the investors’ money in real estate and instead used the investors’ money to make payments to pre-existing investors and to pay his own business and personal expenses – Source.

If you have been scammed and would like to file a scam report, please click here.

Six Hundred Out Of $74 Million In Ponzi Scheme

Amanda Miller — Wed, 04 Jan 2012 19:58:07 +0000

From How to Get Out of Debt

Douglas Vaughan faces 10 to 12 years in prison after pleading guilty to wire and mail fraud charges that involved his operation of a “Ponzi” scheme where he defrauded around 600 investors of more than $74 million.

Vaughan promised extraordinary returns which he obviously did not follow through with. In February of 2011, in an indictment alleging that, between 2005 and 2010, Vaughan operated a promissory note investment program, which he marketed as a means of generating revenue to grow his real estate business, Vaughan Company Realtors (VCR).

Vaughan entered guilty pleas to Count 1 and 4 of a 30-count indictment charging him with wire fraud and mail fraud, respectively. Under the terms of his plea agreement, Vaughan will be sentenced to a term of imprisonment between 10 and 12 years. Vaughan also faces up to five years of supervised release following imprisonment, a fine of up to $250,000, or twice the gross gain or gross loss resulting from his offenses, whichever is greater, as well as any restitution ordered by the Court.

The plea agreement also requires that Vaughan immediately forfeit to the United States previously-seized funds in the amount of $38,298.24 and real property located in Spring Valley, Nevada, and that Vaughan agree to the imposition of a money judgment against him in the amount of $74,745,723.93, which represents
a portion of the gross proceeds that he derived from the offenses charged in the indictment.

The plea agreement also requires that Vaughan resolve two other pending cases: a civil case filed against Vaughan by the Securities and Exchange Commission (SEC) in federal court, and a bankruptcy case initiated by Vaughan in federal bankruptcy court. In the SEC case, Vaughan will consent to the entry of a judgment that permanently enjoins him from violating the federal securities laws. Vaughan also is required to consent to an order by the SEC in an administrative proceeding that bars him from associating with any broker, dealer or investment advisor, and from participating in any stock offerings. In the bankruptcy case, Vaughan is required to enter into a stipulated judgment that denies him a discharge from bankruptcy.

Under the terms of the plea agreement, the U.S. Attorney’s Office will move to dismiss the remaining 28 counts of the indictment after sentence has been imposed on Vaughan. Vaughan remains on conditions of release under pretrial supervision pending his sentencing hearing, which has yet to be scheduled – Source.

If you have been scammed and would like to file a scam report, please click here.

Florida’s Foreclosure Solution Specialists Operators Charged With Fraud

Amanda Miller — Tue, 27 Dec 2011 14:15:27 +0000

From How to Get Out of Debt

Earlier this month it was announced that Lisa Wright, Cathy Saffer and Carrington Coombs were all charged with fraud in a Florida foreclosure rescure scheme. Wright and Saffer were charged with conspiracy to defraud homeowners and banks in a foreclosure rescue scheme. Coombs, a certified public accountant, was also charged as a participant in the scheme.

A federal grand jury in the Southern District of Florida returned an indictment charging Wright and Saffer with one count of conspiracy, three counts of mail fraud and three counts of wire fraud. The grand jury charged Coombs with one count of conspiracy and one count of wire fraud.

The indictment states that Wright and Saffer operated an alleged business called Foreclosure Solution Specialists (FSS) from 2006 to 2009. Through FSS, Wright and Saffer allegedly targeted homeowners facing foreclosure, advertising that FSS could assist those homeowners in remaining in their homes. According to the indictment, when contacted by distressed homeowners seeking assistance, Wright and Saffer misrepresented to those homeowners that their homes would be sold to investors. Wright and Saffer also allegedly claimed that customers could remain in their homes after the sales and promised them an opportunity to repurchase the homes at a later date. According to the indictment, rather than selling the homes to legitimate investors, Wright and Saffer designed sham sales to straw purchasers whom they paid to participate in the scheme.

The indictment further alleges that Wright and Saffer made numerous misrepresentations on loan applications regarding the purchasers’ net worths, incomes and employment histories in order to induce lenders to fund loans. The indictment alleges that, as part of the scheme, Wright and Saffer paid Coombs to sign a letter which falsely vouched for the fraudulent information on various loan applications.

According to the indictment, these sham sales drew equity out of the homes, which Wright and Saffer pocketed for their own purposes. After doing so, Wright and Saffer allowed the loans to go into foreclosure. Homeowners ultimately lost all of the equity in their homes, and most of the victims were forced to move out of their homes.

“Protecting Americans from financial fraud is one of our top priorities,” said Tony West, Assistant Attorney General for the Civil Division of the Department of Justice. “Foreclosure rescue scams, like the one alleged here, are especially insidious because they seek to take advantage of those most at risk of losing everything. These charges demonstrate that we will aggressively prosecute individuals who we believe prey on homeowners struggling in these tough financial times” – Source.

If you have been scammed and would like to file a scam report, please click here.

Fraudulent Rescue / Equity Skim Scheme Costs Dozens Over $6.2 Million

Amanda Miller — Wed, 16 Nov 2011 09:00:17 +0000

From How to Get Out of Debt

Between 2006 and 2008 real estate agent, Joanne Seeley, defrauded 34 homeowners and 14 mortgage companies in Pennsylvania out of more than $6.2 million in a fraudulent Foreclosure Rescue/Equity Skim scheme. Seeley was found guilty earlier this month on four counts of wire fraud and four counts of money laundering; each punishable by a maximum 20 years in prision and a $500,000 fine.

Seeley was a Pennsylvania licensed real estate agent until December 12, 2006, when she permanently surrendered her license in lieu of disciplinary action. Thereafter, in the Fall of 2007 Seeley became the primary owner and operator of a business in East Berlin known as S&D Property Solutions (S&D).

Seeley would identify a residence scheduled for Sheriff’s Sale and advise the homeowner he/she could avoid foreclosure by selling the home to her or one of her investor/buyers, who would then lease the property back to the homeowner after the sale.

Seeley assured the homeowner the sale would allow them to pay off their personal debts, rebuild their credit rating, and allow them to qualify for a new mortgage when they bought back the home one year later. Seeley also promised the homeowners that any equity they had in the house would be held in escrow by the buyer after the sale as the seller’s down-payment.

Seeley recruited and induced several Investor/ Buyers into participating in her program by assuring them they would be reimbursed for all out-of-pocket expenses, including their down payment plus an $8,000 “fee” for engaging in the transaction after the closing.

Seeley also promised the buyers they would receive monthly rent from the homeowner that would cover most, if not all, of their mortgage payments. Some buyers were also promised an up front payment designed to make up the difference between their mortgage payments and the rent they received.

Seeley submitted a plethora of false documents to the mortgage lenders in order to induce them into approving unqualified buyers’ loan applications. The false documents included false employment verifications, false leases, false rental income, and false occupancy verifications.

Seeley also submitted redacted sales contracts to the lenders that concealed the fact the buyer and seller had entered into buy-back agreements and the buyer’s down payment was refunded to the buyer from the loan proceeds.

The trial showed that Seeley converted a significant portion of the $6.2 million in loan proceeds, approximately $2.3 million, to her own use.

Prior to the surrender of her license Seeley would charge the distressed homeowner an extremely high commission ( as much as 40-47%) equal to the homeowner’s equity in the property. Later, Seeley would simply have the homeowners sign over their entire sales proceeds checks to S&D Property Solutions.

Contrary to what the homeowners were promised, no funds were ever escrowed on their behalf. Instead, Seeley spent the money on her personal expenses and no homeowner was ever able to buy their home back – Source.

Greed is a hell of a drug.

If you have been scammed and would like to file a scam report, please click here.

First Ever Central Florida Law Firm To Be Forced To Resign From BBB

Amanda Miller — Mon, 07 Nov 2011 17:00:49 +0000

From How to Get Out of Debt

KEL law firm, formally Kaufman, Englett & Lynd, has been forced to resign from the Better Business Bureau (BBB) of Central Florida. The resignation of this Orlando based law firm marks “the first area law firm to be ousted in the business-rating agency’s 27-year history.”

Apparently the BBB has complained that over the past year KEL has failed to resolve complaints that arose which resulted in them receiving a rare “F rating” for a law firm.

In the past three years KEL has resolved all but three of the 39 filed complaints but the BBB felt their slow pace of tackling 27 in the last 12 months alone was enough to remove accreditation.

“Once a company no longer meets our standards, they are not eligible to have the BBB accreditation,” Judy Pepper, the agency’s chief executive officer says. “We will give those companies the opportunity to resign, or their membership will be revoked” – Source.

While KEL has denied allegations of dropping the ball BBB consumer complaints say that many paid thousands of dollars in fees for foreclosure-defense and mortgage-modification services that were never provided or poorly executed. A KEL representative said last week that “the firm worked diligently to address the complaints, which constituted only a tiny fraction of the firm’s 15,000 cases during the past three years” and that KEL had indeed resigned from the BBB’s accredited membership program but purely out of protest.

The Johnson Law Group of Orlando is the only other local law firm that has received more complaints than KEL during the three year time period with 45 complaints and accompanies them on the F rating list. However, The Johnson Law Group is not a member of the BBB.

Larry Glinzman, a spokesman for Community Legal Services of Mid-Florida, said it is unfortunate that people buy into the notion that they must pay so much for legal help to save their home from foreclosure.

“The truth is many people really don’t need a lawyer for loan-modification assistance,” he said. “Why hire a lawyer when you can get help for free? Most people qualify for it these days; you can call our agency and any number of agencies. We have a reduced-fee program, as well, for people don’t qualify for the free help” – Source.

If you have been scammed and would like to file a scam report, please click here.

Homeowners In Financial Distress Lose Over $1.2 Million To Mortgage “Rescue” Fraud

Amanda Miller — Tue, 11 Oct 2011 16:06:28 +0000

From How to Get Out of Debt

To the tune of a MasterCard commercial:

$4.7 million in fradulent mortgage loans…
$944,224 lost by lenders….
$1.2 million lost in equity to homeowners….

Shameful.

Mary Ann Dean and Charles Donaldson pleaded guilty to the charge of conspiracy to commit wire fraud in connection with a mortgage fraud scheme of Sunset Mortgage Company.

Dean was a loan originator and operator of the Maryland-licensed mortgage brokerage franchise while Donaldson acted as a loan originator during part of the conspiracy. Donaldson would steer clients to Dean’s brokerage franchise and facilitated communication between Dean and buyers and sellers.

Beginning in 2005, Donaldson identified homeowners who were in financial distress because they were unable to make the mortgage loan payments on their homes and enticed the homeowners to participate in a foreclosure “rescue” plan. Donaldson told the homeowners that he would locate “investors” to purchase the homeowners’ properties; that the homeowners would rent their properties after selling them to the “investors,” who would receive a small percentage of the homeowners’ equity; that the remainder of the homeowners’ equity would be transferred to Donaldson, who would hold it in escrow; and that the homeowners would buy back their properties after twelve to eighteen months, during which they could rehabilitate their finances and “repair” their credit while they continued to live in their homes.

Donaldson then recruited associates and family members as “investors” to purchase the properties. He then paid them all a small percentage of the seller’s equity at settlement. Homeowners were then expected to pay monthly rent to the “investor” to remain in their home and in return the “investor” was expected to make and keep up with the mortgage payments.

Prior to the sales of the properties, Donaldson created and recorded Second Deeds of Trust or promissory notes that purported to show debts owed by the homeowners to Donaldson, and which were secured by the existing equity in their home. At the closing of the sale of the property to the “investors,” the title companies disbursed funds to Donaldson’s bank account in order to payoff the liens he had established. Donaldson assured the homeowners and “investors” that he would assist them, if need be, with their rent and mortgage payments respectively, using that equity, which he claimed he was holding in his “escrow account.”

In reality all Donaldson simply put the funds into his own personal checking account, using the for business and personal purposes. Dean knew of this practice the whole time.

Donaldson and Dean obtained the new mortgage loans on the properties in the names of the “investors” with higher monthly mortgage payments, and, most times, higher interest rates, than that which the homeowners were currently paying. To obtain the new loans, Dean made false representations in the loan applications, including, that the “investors” intended to live in the properties as primary residents and inflating the incomes of the “investors.” Donaldson also assisted Dean by procuring false verification of employment letters. Dean, who acted as the mortgage broker, submitted the false loan applications to lenders to obtain financing for the purchases of the properties in the names of the “investors.” In some instances, Dean submitted fraudulent loan applications for the same “investor” to purchase multiple properties as their ‘primary residence’ in a short period of time.

Given the fraudulent loans at a high interest rate and large transaction fees and premiums Donaldson and Dean knew the clients that had trusted them to help them keep their homes had lost control and could not afford the new loan payments since they were now higher than what they were higher than what they were originally paying. They also did not quality for a refinance.

Due to the nature of the high payments “investors” and homeowners were forced to use personal savings and credit cards to keep up with mortgage and rent payments, respectively, until their funds had run dry. The loans went into default and as of right now thirteen of the homes have been foreclosed upon and proceedings for foreclosure have started for three of the other homes.

Lenders made over $4.7 million in mortgage loans based on the fraudulent loan applications, and have so far lost at least $944,223.91. Dean and Donaldson’s scheme also caused the homeowners to lose between $1.2 million and $1.4 million. More than 20 victims were defrauded by Donaldson and Dean.

Inspector General Jon T. Rymer of the Federal Deposit Insurance Corporation (FDIC) said, “I am once again pleased to join our law enforcement colleagues in defending the integrity of the financial services industry by combating mortgage fraud. We are particularly concerned in cases like this one where professionals have misused their positions of trust and whose fraudulent activities in committing mortgage fraud have harmed numerous innocent homeowners. We are committed to continuing our investigations of such criminal misconduct to help maintain the safety and soundness of the nation’s financial and lending markets” – Source.

If you have been scammed and would like to file a scam report, please click here.

Pharmacist Sentenced To Nearly 5 Years In Prison For Medicaid Fraud

Amanda Miller — Fri, 07 Oct 2011 19:00:53 +0000

From How to Get Out of Debt

Healthcare fraud and money laundering? Again? Sure, why not.

John Love has been sentenced to 51 months in jail for laundering money and defrauding the healthcare system. Love apparently used taxpayer’s money to live well beyond his means and his sentence is meant to make it clear to others defrauding the system that there is zero tolerance for this type of action.

As a pharmacist between 2006 and 2010 and controlling member of the Terre Haute Prescription Shop (THPS), Love used his position to carry out his fraudulent scheme against the Indiana Medicaid Program. He submitted claims to the program for false prescriptions that were never given to patients. After inputing these fake prescriptions and submitting them to Medicaid he would then void the prescription before any other employee could take notice that the prescription that was never filled and/or dispensed.

As part of his scheme, Love billed the Indiana Medicaid Program for prescription drugs significantly in excess of what THPS had ever ordered, for example:

Love billed the Indiana Medicaid Program for 1,317.4 units of the prescription drug Aranesp and received a total of $1,677,554.50. During the same time period, THPS only ordered six units of Aransep at a cost of $5,188.36.

Love billed the Indiana Medicaid Program for 172 units of the prescription drug Copaxone and received a total of $236,989.54. During the same time period THPS only ordered 20 units of Copaxone at a cost of $29,265.87.

Love billed the Indiana Medicaid Program for 660 units of the prescription drug Epogen and received a total of $126,732.80. During the same time period, THPS only ordered ten units of Epogen at a cost of $2,545.69.

Love billed the Indiana Medicaid Program for 588 units of the prescription drug Humira and received a total of $429,959.82. During the same time period, THPS only ordered 98 units of Humira at a cost of $62,693.53.

Love billed the Indiana Medicaid Program for 1,488 units of the prescription drug Procrit and received a total of $615,612.23. During the same time period, THPS only ordered 22 units of Procrit at a cost of $6,366.40.

Love billed the Indiana Medicaid Program for 2,630 units of the prescription drug Sandostatin and received a total of $343,334.58. During the same time period, THPS did not order any units of Sandostatin.

As a result of this scam the Indiana Medicaid Program paid directly into THPS’ bank account the amount of $3,575,699.73 for fake prescriptions. Since Love had control at THPS used at least $3,000,000 of the fraudulent proceeds to purchase, in whole or in part, four parcels of real estate; fifteen vehicles, including five Harley Davidson motorcycles, a Chevrolet Corvette, and a Cadillac Escalade; a destination wedding for one of his children in Destin, Florida; and numerous other personal expenses. The money laundering convictions concern the purchase of one Harley Davidson motorcycle and the destination wedding.

Love has forfeited roughly $666,307.06 in the value of vehicles owned minus the cost of maintenance and liquidation – Source.

If you have been scammed and would like to file a scam report, please click here.

I Invested in Real Estate Using Credit Card Convenience Checks. – Tina

Steve Rhode — Mon, 05 Apr 2010 20:44:30 +0000

From How to Get Out of Debt

“Dear Steve,

I borrowed about $40,000 from 4 credit card companies after they kept sending me convenient checks with teaser rates. I had learned from a real estate seminar that this is the way to invest in real estate using other people’s money. I also used some of the money to invest in the stock market.

Unfortunately, given the financial meltdown, my property was foreclosed upon and I also practically lost everything in some bad stock market investments. I’m retired on a fixed income with hardly any extra cash left over after living expenses. I also have a medical problem.

I’m now 4 months late (stopped payment in March 09). I just took out a reverse mortgage and plan to use the little cash I’m going to get to pay off the creditors. I want to make one payment to each creditor to settle the debt. Bankruptcy is not an option for me.

What is the best way for me to approach the creditor to settle the debt in a way that I can afford? What is the lowest percentage I can ask for – 20%, 30% etc? When does the credit card company sell this debt to an outside agency? Is it better to settle with an outside collection agency?

Any help you can provide me would be greatly appreciated.

Tina”

The Answer:

Dear Tina,

Before I give you any additional advice, why is bankruptcy not an option for you? Do not make any promises to pay or enter any settlement agreements until we can get to the bottom of this.

Big Hug!

@GetOutOfDebtGuy

I’m Trying to Buy a House But I Have a Judgment Against Me. – Tony

Steve Rhode — Sun, 07 Feb 2010 19:33:43 +0000

From How to Get Out of Debt

Tony

“Dear Steve,

I dont understand what you are wanting to know on this.

Ok short story im buying a house. The title company tells me there is a judgement against me the judgement was put on Nov 30 1999 so i called the company they have no clue what Im talking about and im not in collections. I live in washington state from what I have read about the statue of limitations i beat this. Am I right and if so how do I get this judgement off record?

Tony”

The Answer:

Dear Tony,

You’ll need to go to the source. Get a recent copy of your credit report. On your credit report it will typically list the court case and cort where the judgment against you was obtained. Armed with that information you should contact the court and purchase a copy of the case records.

Those records will tell you exactly who was awarded the judgment against you and you can then contact them to either pay the judgment or get a letter from them saying the judgment was satisfied.

Steve

How Bad is Bankruptcy? Should I Wait to File Until My Home is Foreclosed? – Trudy

Steve Rhode — Tue, 02 Feb 2010 22:43:47 +0000

From How to Get Out of Debt

Trudy

“Dear Steve,

My son was diagnosed with Leukemia had bone marrow trasplant medical bills out the ying yang. I make my living as a Realtor but with no work and an economy that is shattered I lived off credit cards for two years so I could be full time caretaker to my son who is finally this fall gone back to school. Somehow I have to find money for college (single mum). I can’t pay anything anymore I am so down health and mentally at present time.

How bad is bankruptcy should I wait to file until my home is foreclosed what should I do?

Trudy”

The Answer:

Dear Trudy,

I am so sorry that you’ve had to live through this. It is easy to see how these events can impact you emotionally. The fear and worry for your son and the loss of self-esteem and fear with the inability to earn as you once did. Feeling of stress, depression and illness are typical at times like these.

Bankruptcy is neither good nor bad. It is emotionless. It is a legal tool one can use to remedy an impossible financial situation when no other options exist or are realistic.

If your home will be foreclosed on then you might as well just wait for that to happen so you can put the debt owed from that in the bankruptcy as well.

At this time, expecting that bankruptcy is in your future, I’d turn your attention towards finding a job, a new place to live and looking forward to a new and better future.

If money looks hard to find for college, maybe you might want to consider having your son contact the financial office at his college to see what loans he might be able to take out in his name. Just becuase he takes out the loan does not mean that you can’t make the payments to help.

It is probably the time now to start talking to a bankruptcy lawyer and plan for your upcoming bankruptcy. Click here for bankruptcy information.

I’d suggest you first read How to Get Out of Debt. The Honest and Unvarnished Truth and The Truth About The Success Rates, Failure Rates and Completion Rates of Credit Counseling, Debt Settlement, and Bankruptcy. They will give you a great overview of what we need to deal with to get you moving in the right direction.

Then use the free How to Get Out of Debt Calculator to review your options.

Big Hug!

@GetOutOfDebtGuy

I’m a Realtor and Drowning in Debt. – Sharon

Steve Rhode — Fri, 22 Jan 2010 22:39:40 +0000

From How to Get Out of Debt

“Dear Steve,

Due to downturn in housing market, my job as a Realtor was almost eliminated. My $160,000 annual commissions went down to less than $20,000 gross. All the costs associated with being a Realtor still applied. I used all my savings, retirement, insurance cash value, to survive. When that was gone, I used the extensive lines of credit that were available ($80,000). About this time last year, all was exhausted and the market was still in shambles.

I quit paying my unsecured debt about one year ago. Now, the real estate market in my world is returning. After having no closings for nearly a year, I have had one a month since April. And, it is getting better. Now that I have some income again, I am trying to place my debts with a debt settlement company. I bellieve that now I can actually make monthly payments toward the debt.

I have one creditor, Chase, that has scheduled a court date. Most all other accounts have been charged off and some are with collection companies that have offered to settle, but I have not had the money. I have two of those debt collection companies threatening me with legal action now, but no summons as of yet.

One debt settlement company told me that my attorney could take a letter from them to the court on the date Chase has set. She said the letter would satisfy the judge and he would feel the matter was resolved. So my question is #1) Is that statement true and 2) am I in too deep for debt settlement to help me now? I really do not want to file bankruptcy. I believe that with a little more time and a steady recovering housing market, I can resolve these issues. Thanks for your assistance.

Sharon”

The Answer:

Dear Sharon,

Well the good news is that things are looking up and that’s always the hallmark of a good day.

The “take this letter to court” statement is pretty near BS for me. The judge will need to look at your situation as a matter of law. And if you were in a debt settlement program what would the argument be? “You honor, please forgive Sharon for paying us instead of her creditor.”

If you want to settle your debts for less than you owe, be legally protected and make payments over time, go talk to a local bankruptcy attorney about a Chapter 13 bankruptcy. You’ll be able to keep your home.

Bankruptcy will be exceedingly cheaper for you than debt settlement. And before you start stressing what bankruptcy will mean for you, go and talk to the bankruptcy attorney for free. Most offer a free bankruptcy consultation to answer your questions. If bankruptcy is a good solution for developers, why isn’t a good solution for realtors? It is.

If you want to stay in your profession, consider bankruptcy, make a ton of money moving forward and save a lot of it to tide you through any future economic downturn. No sense wasting a perfectly good mistake. Learn from it.

Big Hug!

@GetOutOfDebtGuy

My Husband and I Are Considering Filing Chapter 7 Bankruptcy in Oklahoma. – Amber

Steve Rhode — Fri, 08 Jan 2010 13:55:03 +0000

From How to Get Out of Debt

Amber

“Dear Steve,

My husband and I are considering filing chapter 7 bankruptcy in Oklahoma. The only thing that I have in my name is $5,000 worth of property. My grandparents gave it to me and the way the deed is wrote up is that I can’t ever sell it. It can only be passed down to the family or possibly sold within the family. We don’t have anything else in our name. Could I get my property exempt from being taken? There isn’t anything on the property, but we want to keep it. It’s the only thing we have.

Thanks.

Amber”

The Answer:

Dear Amber,

I could look that up and give you an answer but you need to go and see a local bankruptcy attorney and ask him or her your question. The bankruptcy attorney will be happy to explain everything and answer all of your questions before you decide to go bankrupt.

If you don’t know of a local bankruptcy attorney you can click here to schedule a free bankruptcy consultation.

A bankruptcy attorney that is licensed in Oklahoma will know what the laws are in Oklahoma and what tricks or techniques might be available to help you with the property situation.

Whatever you do, don’t rely on anyone but an Oklahoma bankruptcy attorney for an answer to your situation.

Big Hug!

@GetOutOfDebtGuy

My Husband Was Laid Off and We Lost Our Six Figure Income. – Cindy

Steve Rhode — Mon, 28 Dec 2009 13:16:15 +0000

From How to Get Out of Debt

“Dear Steve,

In Nov. ’07 my husband was laid off as a homebuilding superintendent. His salary was 6 figures, we were in the middle of a huge remodel on our home. The bank stopped making loans to the buyers of his homes, the job site (an entirely new community) was shutdown, he was laid off after 20+ years in the industry.

The mortgage industry imploded and an entire industry (construction) was decimated. Our remodel came to an abrupt halt but we still have all the construction debt. The same bank that got him laid off holds our mortgage.

They told us to use our 0% credit cards (remember those…no fees or cost for at least a year) to do the remodel. Then when we were done, refinance (which we already were approved for) at the higher appraisal, lower interest and best monthly payment. Our credit score was in the upper 800′s with no lates in our 25 year history. We had $500,000 in open credit at the time. We were very responsible and didn’t live outside our means so it seemed completely reasonable at the time. (It sounds insane now!)

All that has changed dramatically…our remodel was never completed (we have lived with open walls to to the outside elements ever since!), he has not found a job in over two years now, our debt is almost 100k (construction) plus our mortgage of $500k. We have used up all our resources and savings. The credit card companies have taken all our open credit away (we weren’t late on anything at that point)…we lost nearly $300k in open credit in ONE day! But they said it wasn’t our fault, they were doing that to everybody!!!

We were enrolled in the Obama plan beginning last June and made the first two of three payments on time and were awaiting paperwork for the Making Homes Affordable plan when we learned that not only were we not enrolled in the plan but our payments were not credited to our mortgage and we would not be enrolled in the plan (this is said after 30+ bank employees told us for two months that we were) that the bank never intended to even put us in the plan and no paperwork was coming. We didn’t get our money back either.

Since August we have jumped thru every hoop, sent every bit of information requested, got passed around from one person to the next…each with a different story. We have not been able to make our mortgage payment since July but have cont. to pay our ccard bills but starting Jan 1st we won’t be able to even make those either.

The rates and monthly minimums have skyrocketed to as high as our mortgage. The “negotiator” spewed 5 or 6 options that we could do and when we asked for it in writing (we didn’t do that with the Obama plan and you can see that verbal didn’t work) so we could look at what the investors were offering.

We heard two out of the offered options might be doable but that we wanted it in writing. She refused and closed our file saying we declined help! We never declined anything! We just wanted it in writing to have proof that we were in a plan! That put us on the fast track to foreclosure and it took some real doing to get the file back open and on the table again. The next offer came in so high that we couldn’t even begin to entertain that option and we are back to square one. We do not know what to do next or how we can keep this all from swallowing us up.

We didn’t cause this. We are responsible, tax paying people who work hard. My husband wants desperately to be back at work and he will do anything and has answered every job ad possible. In a nutshell, the bank closed down my husband’s construction site, got him laid off, has kept him laid off as the entire industry worldwide (he has looked everywhere!) is gone due to the mortgage implosion…but the bank was bailed out big time but refuses to pass along the bailout to the taxpayers (us) that got them the bailout in the first place and we are left holding the bag of debt without any hope of getting out and losing everything in the process…we have poured everything into this home that we love and to lose it to the bank that put him out of the job and started this horrible cycle downward to begin with is just too much to cope with.

We need help and fast. We are not getting any help from the bank, our congressman (who promised to help but hasn’t), we are getting the run around that we have read on your site that so many people are going through…we know of so many families like us that are going through the same thing…we are barely making it every day and to see these fat banks rolling in bailout while they withhold all promise of help is beyond fair!!!! LIFE Isn’t Fair Ever but this is ridiculous!

What can we do? Is our only option Bankruptcy? Which one 13 or 7? Does it really save your home? I never thought we would ever be in this situation, ever. Thank you for any advice you can possibly give. blessings!

Cindy”

The Answer:

Dear Cindy,

Is bankruptcy an option, it certainly is and in a perfect world you would have pursued it before spending down all your savings and burning your safety net. But it is what it is now so let’s see what can be done.

Ironically, My bankruptcy was caused by banks shutting down credit which helped to throw me into a bind with my real estate business back in the late 1980s. So I think I have a bit of an idea what you are going through.

Here’s what I know to be reality.

Anger gets you nowhere. It might certainly feel unfair but it is the natural circle of life. There have never been any guarantees of income and there never will be. Anyone earning a paycheck today could be out of work tomorrow. Employers hire people at will and can fire anyone for anything at anytime. Nobody is guaranteed a paycheck.
People on the other end at the banks and creditors are just pushing paper and punching a clock. You are nothing but a file on a desk. It is all a giant process and most inefficient at that. When a process doesn’t make an allowance, like for a written offer, you won’t get one.
The world isn’t going to return to what you knew. You are going to have to change to find a new world. That might mean moving to where jobs are plentiful, even if it means a lower income. Staying where you are is only possible if you move to a different industry. Think about it like the farms in the Oklahoma Dust Bowl in the 1930s. No matter how much they wanted it to rain and save their crops, it just didn’t. Many packed up and moved to more opportune areas, like California at the time.
The advice you got about putting the debt on the cards was horrible to begin with. No credit line, either on a card or some other line of credit, is guaranteed. The bank giveth and the bank can taketh away, at any time and for any reason.
There was never much of a chance the loan modification was going to be approved. The vast majority of loan modifications were either not approved or did not result in meaningful help. Many found their mortgage payments were the same or higher.

If your home has open walls to the outside elements and there is no work where you live, I have no idea why saving the house would be either feasible or a logical approach.

But the good news is there is a legal option, bankruptcy, that would allow you to reboot your financial life and start over, leaving this terrible baggage of debt you can’t possible handle, in the past.

I would urge you to click here to find a local bankruptcy attorney you like. Make an appointment for a free consultation and you and your husband need to go and meet the attorney. Ask all the questions you can and then go home and mull it over. You don’t need to make a decision that day, but soon.

These actions and changes you will need to make will be difficult, but the sooner you start taking steps to move forward with your life and accepting your current reality, the sooner the stress and fear will be resolved.

I hope I haven’t been too blunt but I need for you to see the situation clearly and stop this very minute trying to repair the damage that has already been done. Instead, I need for you to turn around and start fighting to make life better for tomorrow. I need you to get back into any position where you can start saving again and enjoying life.

Big Hug!

@GetOutOfDebtGuy

If you have a credit or debt question you’d like to ask just use the online form. I’m happy to help you totally for free.

I’m a Realtor and Have Never Missed a Payment, Until Now. – Frank

Steve Rhode — Mon, 14 Dec 2009 09:27:21 +0000

From How to Get Out of Debt

Frank

“Dear Steve,

I have $59,000 in unsecured debt. My credit history is very good. I have never been late on any payments. I lost my job of 21 years about 5 years ago and started a new career in real-estate. the last year has killed me and I fear that I will miss payments in the near future. I will not refinance my home.

What do you recommend?

Frank”

The Answer:

Dear Frank,

When you say that you will not refinance your home that leads me to believe that you have some equity in your home. That can be a problem.

If you can’t afford to make at least the minimum payments on your credit cards, your options are limited. You could check with a debt management company and see what kind of repayment plan they can put together for you but if you are not behind on your cards now, the monthly payment will be fairly close that what you are paying now.

It used to be that creditors would let you cut your monthly payment in half when you were in a debt management program but they stopped doing that. And now, in a debt management program your interest rates might be cut but big deal. If they don’t lower the payment then most people can’t get by.

So if you don’t pay at least the contractual minimum amount due you will wind up in collections, as that lingers and festers it could lead to a lawsuit and a lien placed against your house.

The debt is really secondary to the underlying problem here of being underemployed. I’d suggest that you focus your efforts to bring your income up to a point where you can make at least the minimum payments so you can keep your house out of this mess.

Big Hug!

@GetOutOfDebtGuy

Josy Writes “My Real Estate Business Is Going Down The Drain”

Steve Rhode — Sat, 12 Dec 2009 00:58:18 +0000

From How to Get Out of Debt

Josy

“Dear Steve,

I am in the Real Estate Business. We are also a General Contractor. We currently have close to 4 million dollars in property, but have 1 million dollars in debt. But with the curent economy situation, we have found ourselves in a rut. With little money to build and lots of property we know that if we find the right solution, we can take care of our situation.

Our credit has gone down the drain and we are now on the verge of losing a lot of the properties we own. There’s only two of us, and we’re running short of ideas. Sometimes we just want to throw in the towel. But we’ve come too far to throw it all away. We are constantly being hounded by debt collectors and are behind on car payment as well as mortgage payments. The banks don’t seem to care about the 4 million dollars in assets.

Any ideas?

Josy”

The Answer:

Dear Josy,

I’m not sure if I’m the right guy to ask. I went bankrupt from my real estate development business. Ironically, I learned more from my bankruptcy than I ever did in all my years in college.

If we separate out the emotional component and look at your situation purely from a business point of view I think there are several critical areas to look at before you can decide what path is right for you.

What concerns me the most from your story is that in your desire to save the business you have allowed car payments and mortgage payments to be missed. Those payments must be brought current and kept current. You need to keep a roof over your head and a car for transportation. If the business can’t survive if you make those car and mortgage payments I think you got your answer that the business must go.

The banks don’t give a damn about how great of a job you have done they want to see a reasonable plan on how you are going to return their money to them. Your best course of action is to put together a written business plan on what needs to happen to save the business and see if you can negotiate a solution with the bank from that as a starting point.

The bank can modify your loans and may if they see a logical and reasonable plan where they can recover their money if they give you some slack. If you can’t present a logical solution then they may not give you any breathing room or more time because why prolong the inevitable. If that’s the case, it is better to know that now than to drag yourself further down a black hole.

I’m not sure I care about the fact that you value your assets at $4 million because assets do not have value based on what you paid for it or what it might have been worth. Value comes from that amount that the buyer and seller agree on at the time of sale and I’m not sure what the written down value of your properties would be if you could find a buyer today. Probably not the full $4 million dollars. Not in this down real estate market.

It’s not too late to reinvent yourself and consider contractor work that you may not have done before. For example, small builders are not busy right now and a number of them have switched their focus to home remodeling rather than building. What they are finding is that people are more interested in fixing up their current properties than buying land and building from scratch.

It might just be that there is no reasonable expectation that you will be able to hold on to the properties in these lean times. If you had loads of cash in the bank to carry you through, that’s a different story. But without any buyers lining up, your own home potentially facing foreclosure, your car on the verge of being repoed and the bank unwilling to bend, you might just have to face the fact that you gave it a good fight but the battle is over.

In that case bankruptcy might wind up being the most logical solution to give you an opportunity to get a fresh start by discharging the debts you can’t pay. Sure bankruptcy is emotionally draining and you have to start over again but it can give you a chance to begin again instead of just being on the receiving end of all that is going on now.

I went bankrupt, it sucked, but in the long run I did have an opportunity to move forward with my life, my new life. I no longer did real estate development, for me that experience was too painful, but I went on to do other things and have a different future.

Oh and let me not forget that if your public identity to the world has been as a builder, developer and contractor, one of the hardest things you can do is to fold the business. Everyone will know and it is a public admission of failure. It is but, your business is not what defines who you are unless you let it. Don’t make the mistake of trying to hold on too long and lose everything just to maintain an image that you can no longer afford due to circumstances beyond your control.

Of course, you can always keep putting one foot in front of the other and just wait until stuff is taken away from you by the banks and lenders. When that starts happening then that will be a big clue that it’s over.

Big Hug!

@GetOutOfDebtGuy

P.S. First item to address though, get those car and home mortgage payments current.

The Answer:

Home Inspection People Want Us to Pay For Services After Our Real Estate Agent Died. – Ella

Steve Rhode — Tue, 03 Nov 2009 17:20:43 +0000

From How to Get Out of Debt

“Dear Steve,

We tried to sell our house 2 years ago, agent agreed to pay for virtual tour, carpet cleaning and home inspection. The house didn’t sell and our real estate agent died months later from heart attack. Now home inspection company wants us to pay for the service done then.

I think they couldn’t find the agent to pay due to her death. We may be able to find the written agreement that stated our agent would pay for this. Home inspection company insists even if we find proof we should pay for it otherwise they will sent to collection company and will affect our credit. Do we have to pay for this? I don’t think our credit will be affected since they don’t have our credit card or social, but would they sue us and what would happen at court?

Ella”

The Answer:

Dear Ella,

Wow, that’s a new one for me.

I suppose the issue here is who contracted for the services. If the agent contracted for the service as part of her business services for you then you would not be responsible for the debt. If you contracted for the service on behalf of the agent and she agreed to pay for the service, you are responsible for the debt.

How much do they say you owe?

Their argument is going to be that you are the ones that received and benefited from the service but outside of maybe getting your carpets cleaned, if the agent is the one that ordered the services in order to assist her in her business, of selling your house, it does not seem you got a benefit out of it.

I think this is one of those issues that can be easily resolved by finding a local attorney and have them write a letter for you and represent you. I doubt that representation would be more than a few hundred dollars. So if the amount claimed is much higher, investing in a local attorney would be a smart investment.

Please update me on your progress by posting updates here in the comments section of your question. I’m very interested in how this works out for you.

Big Hug!

@GetOutOfDebtGuy

P.S. Be sure to read ‘The Secret of Surviving Through Difficult Economic Times. What I Learned On My Journey‘.

If you have a credit or debt question you’d like to ask just use the online form. I’m happy to help you totally for free.

The Banks Won’t Refinance the Investment Rental Properties I Bought Using Credit Cards. – Kyle

Steve Rhode — Tue, 02 Jun 2009 19:48:58 +0000

From How to Get Out of Debt

Kyle

“Dear Steve,

Quit my job to do real estate investing. Was doing well, but then banks changed lending laws and I couldn’t refinance the houses I had. I bought them using credit cards. I was able to sell one of them, but on top of living on my savings and no income, things depleted quickly. I bought another house thinking that if I could fix and sell it quickly I could make anough money to pay down almost all my debt.

Unfortunately my contractor bailed, I have been paying on it for a year (half is a loan half is on credit cards), and I can’t sell it because he placed a $30k lien on it. I have a contract that will hopefully hold up in court and take the lien off, but until then, I am running out of money.

After this month I can’t pay any bills. I have over $150k in personal credit card debt ($80k is related to the house). The loan is $80k and in my LLC name. The one year hard money loan is due July 1st. I have no idea when the court date is for this lien.

My life is falling apart. I have always been a hard worker and have always had money. This last project has torn me to pieces. I only have a part time job right now. Because of the economy I can’t get a decent position anywhere. What do I do??

Kyle”

The Answer:

Dear Kyle,

You’ve got a big problem. But the good news is that you’ve got a great opportunity to start over again and get out from under this pressure.

While I’m feeling better about the economy improving, it’s still down right now. I seriously don’t see real estate values launching back to space where they were before.

I really can’t see any sort of realistic option that is going to get you quick relief or help you to make ends meet here.

Some of the things that ran through my head included angel investors, shared equity partnership, etc. In this market with the situation on that house, I doubt anyone is going to want to jump in with any deal that will rescue you personally. They might try to steal the house for the lien amount but that still leaves with with all the credit card debt you still can’t service. Even if they gave you $10,000 to $20,000 that is still not enough to resolve your personal financial problem.

I would imagine that the credit card payment alone is about $3,000 a month and on top of that you’ll need to add in all your other expenses.

If I read your question right the LLC loan might be a balloon note and maturing in July. That’s really bad news if that’s the case. You certainly don’t have $80,000 to repay the note if it is.

I think the minute you finish reading my answer here you need to be on the phone to a couple of local bankruptcy lawyers and trying to schedule a free bankruptcy consultation appointment to go in and discuss the situation.

When you meet with the bankruptcy attorney you can discuss the situation with the LLC note and if you personally guaranteed it.

With the lien, real estate market, note and cash flow situation, I think the time has come to put this bad situation to rest and instead focus on moving forward with a new life.

Big Hug!

@GetOutOfDebtGuy

Mortgage Company Disappears, Won’t Take Payments, Violated RESPA – Reta

Steve Rhode — Fri, 16 Jan 2009 21:45:19 +0000

From How to Get Out of Debt

Reta

“Dear Steve,

Mortgage company disappears without claiming foreclosure, violated RESPA, never contacted us after obtaining the loan, never sent monthly statements, contacts us after we find them, then tells us they will work out a plan, we send in a payment…3 weeks later they send it back, say they are filing bankruptcy, and never did, and now its been 2+ years…what can I do to eliminate this from my title and not pay any taxes on the now disappeared mortgage?

Reta”

The Answer:

Dear Reta,

What a nightmare it has been for you. At this point, and with these many issues surrounding your real estate title and property I think you really have no other logical choice than to seek the assistance of a real estate attorney licensed in your state.

This is such a mess that it is going to take a professional to fix it so you can get a clear title to your property at some point.

Big Hug!

@GetOutOfDebtGuy

Christine Writes And Asks Me “Should We Liquidate The IRA to Pay Off Debt?”

Steve Rhode — Thu, 25 Sep 2008 19:29:01 +0000

From How to Get Out of Debt

“Dear Steve,

We have about $35,000 in current debt not including a home that is not finished. We have about $120,000 in IRA money. We own $75,000 in real estate free and clear that is for sale but not sold yet. Should we liquidate some of the IRA money to help out our debt?

Christine”

Dear Christine,

The interesting thing about helping people with debt problems and to get out of debt is that no two situations are ever the same. Recently Steve wrote in and asked me a similar question about borrowing from his retirement account. You might want to review that Q&A to see what I also told him. The advice I give you is probably going to be different.

It is hard for me to consider borrowing retirement funds as a good thing to do. I am a firm believer of putting money into IRA and 401(k) accounts and leaving it in there to grow. While it is in there it might require some readjustment of the mutual funds it is invested in but taking it out is almost always a mistake.

I say almost always because I have advised some people to do it in certain situations and I could see myself doing that if I was in a really bad situation as well.

The times that I have suggested borrowing from the IRA are usually when there is a critical situation that would be fully resolved by borrowing the money. One example was when this couple came to me for help and their newborn son had just died and she was now out of work. The husband had been diagnosed with cancer and was having to drive 200 miles each way for special treatment. The cost of the treatment, his time off work and the gas, plus funeral expenses had deflated their bank accounts.

With everything going on they fell behind on their bills. They owned a house and had about half of it paid off. Capital One was coming after this guy really hard for about $65,000 and he didn’t have it. He looked into refinancing their house to take cash out but he could not find a lender.

He had about $50,000 in his IRA and after fees and penalties he would wind up with about $37,500 if he cashed it out. I told him that if he could get Capital One to agree to settle the debt for that amount he would avoid bankruptcy, putting his home at risk and he could retire this debt once and for all.

Capital One refused to accept less than $43,000 and we talked about it on the phone. He was bummed, I was depressed and even the story and documentation would not persuade Capital One to accept his entire IRA as a settlement.

He called me the next day. Seems that when he got home he opened the mailbox and in it was a letter from a different department at Capital One agreeing to accept $25,000 as a full and final settlement. Just goes to show you that big creditors don’t have a clue what other departments are doing or saying.

He took the offer, cashed out most of his IRA and paid off Capital One which saved his house and it gave them tremendous peace of mind.

But Christine, that does not sound like your situation and in your case, based on what you’ve told me I’d say that you should not tap your IRA to pay off your debt.

It sounds like our primary issue here is that we are waiting for the home to sell and when it does you’ll have enough cash to pay the cards off completely.

If you rush to cash out or borrow from your IRA it will be very difficult to return yourself to the same position you are in today. With the stock market in the sewer as I write this the value of your IRA is probably off by a large amount. If you sell now you will get less for your shares than if you hold on to them and let the market come back.

If you take out $35,000 and before you can repay that money the market starts to climb again the same amount of shares will cost you more and maybe a whole lot more. And if you can borrow from your IRA and pay it back at a low interest, say 5%, it actually costs you a whole lot more than that. You’ll have to pay the 5% plus lose the increase in value of those stocks you would have got if you left those shares alone.

If the market rebounds and your IRA goes up 15% in the next year or so then it doesn’t cost you 5% to borrow, it costs you 5% + 15% = 20%. That’s expensive.

Generally you are always better leaving the IRA money as ‘off limits’ except in rare circumstances.

Let’s do this, let’s revisit the situation in a couple of months and take a second look at your situation then if things have not changed with the house.

Big Hug!

@GetOutOfDebtGuy

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